Whether youâ€™re going off to school for the first time, or heading back to finish your undergrad degree, there are a number of ways to stay financially responsible as you’re making one of the most important financial decisions of your life. The key to success is keeping your budget in check, which means you have to be prepared and be proactive. Here are some top tips to help you stay within your means and stay on track for fiscal prosperity:
Communicate with a Trusted Advisor
Communication with your parents/guardians or anyone involved in financial matters related to your education is extremely important. Keeping those kinds of conversations open helps you stay on track and make better decisions in the long run. When everyone knows everything, the input of others can help mitigate your risks and any surprise expenses that might put you in a difficult situation.
List Your Recurring Expenses
Write out how much youâ€™re spending on recurring expenses (rent, phone, etc.) and when or how frequently you pay for them. Get everything out on paper (or a doc, spreadsheet, etc. – just somewhere easily accessible). Having a full list of expenses at your disposal gives you more peace of mind, and helps immensely with budgeting. If you don’t know what or where youâ€™re spending, it’s like trying to see in the dark with your eyes closed – youâ€™re not going to have a clear idea of your cash flow needs.
Track Discretionary Spending
If you seem to be veering off of your plan or coming up short, itâ€™s good to keep track of what your additional, or discretionary, spending is going toward – and can help you build a better financial plan going forward. Seeing trends in where, when, and with whom you spend more or less can help you with re-allocating your budget and even choosing which plans to make. Spending a lot on the weekends? Maybe itâ€™s time to cut back on eating out (I know, it can be hard).
Develop a Realistic Budget Based on Your Needs
Create a budget that suits your needs starting with the fixed or recurring expenses you have; this is your monthly baseline. Itâ€™s important to put these into a document that you can alter if needed – like a change in income in a given week or unexpected vehicle expense. Putting down things that impact your income/cash inflow eliminates the guesswork and will show you what funds are available to you at any point in time. Your total at the bottom should not be negative. If you need help, there are plenty of free online resources at your disposal; see suggestions at the end of the post.
Ways to Plan Spending Better and Pay Less:
Room and board
Be sure to weigh out what makes most sense to you. Whether itâ€™s finding an apartment and paying for rent and groceries, or living on campus with a meal plan. Depending on the area, rent and groceries can sometimes be expensive, so check out what prices are like near your college/university or program.
Textbooks and school supplies
Textbooks and supplies can really put a dent in your budget. Students can pay upwards of $1,000 per year on books and supplies. Try your best to find used books, or ask your professor if there are any alternative resources available.
Be sure to keep new clothes in mind, especially if youâ€™re frequenting job fairs. You always want to look your best when scouting for jobs.
If you need to commute to and from school, be sure to include this in your budgeting. Monthly train/bus passes can be useful if youâ€™re constantly having to use them to go back and forth. Factor in gas, insurance and parking passes if you have a car.
Things like going out for food, entertainment, and travel would go in this category. Make sure to take care of your immediate expenses before spending heavily on these â€œnice to haves.â€ Though it can be especially tempting, you want to cover other financial bases first before you spend here.
Tax and Credit Card Considerations:
Calling back to the communication piece, make sure the information in your FAFSA is correct. Job loss or raises can often impact your FAFSA. Depending on if someone claims you as a dependent can have an affect on deductions and tax credits.
Make sure youâ€™re not spending what you donâ€™t have. You never want to have to play catch-up with credit card companies. If anything, keep a maximum amount of what youâ€™re willing to spend on your credit card, and then pay it off as soon as possible. You can also earn extra rewards this way, and use your points or cash-back for something else!
Ultimately – communication, transparency, and careful planning are the keys to keeping your budget healthy and on track.
We know how important financial wellness is to your short and long-term goals. Thatâ€™s why weâ€™re adding a Financial Literacy Module to our Talent Accelerator Platform. Letâ€™s fine-tune your finances together!